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Chinese to take over Rosneft Russia in privatization 2016

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Decision on the privatization of shares of Russian oil giant Rosneft has been taken and all revenues from privatization will be transferred to Russia’s federal budget, Economic Development Minister Alexey Ulyukayev said on Friday.

“Formally, the sale of Rosneft will be done by Rosneftegaz so these revenues will be raised to the budget as dividends of Rosneftegaz, which means that these are direct budget revenues. It is just a formal procedure. I think the relevant decision is there,” he said.

Russian experts say Chinese oil companies could take part in the privatization of Rosneft.

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Ulyukayev said earlier diamond mining company Alrosa, oil companies Bashneft and the sanctions-hit Kremlin oil major Rosneft will be privatized in 2016.

Rosneft CEO Igor Sechin said that it was necessary to wait until the price of oil at $100/barrel for the effective privatization of Rosneft. He also said that it is necessary to take into account other circumstances, such as the need to form additional revenues for the budget. Sechin estimated the fundamental value of the company at $100-130 billion.

In 2015, Russian Finance Minister Anton Siluanov said that foreign companies, in particular Chinese companies, may take part in privatization.

Rosneftegas, which manages the assets of the Russian government in oil and gas industry, owns more than 69.5% of shares of Rosneft. British BP owns 19.75% of shares of Rosneft.

According to an order signed in November 2014 by Russian Prime Minister Dmitry Medvedev, the Rosneft shares to be privatized cannot be sold for anything less than the initial public offering (IPO) of $8.12 per share.

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